Smith v. Epping

It being found that the money borrowed of the plaintiffs did not go to the use or benefit of the defendants, and there being nothing which tends to show that the transaction was in any other manner ratified by them, there can be no recovery unless the plaintiffs prove that their notes were issued by the selectmen in the exercise of a lawful authority conferred by the defendants. Rich v. Errol, 51 N.H. 350, 361; West v. Errol,58 N.H. 233, 234.

This they have failed to do. On the contrary, assuming, as it must be, that the vote of April 23, "to raise the sum of $3,000 for the foundation and furnishing of the building," was a vote to raise that sum by taxation, the conclusion is unavoidable that, when the plaintiffs' notes were given, the authority of the selectmen to borrow money under the special votes authorizing them to do so had ceased. The specific acts which they were alone authorized to do had been fully accomplished; their special and limited authority had been exhausted; their agency had terminated; and they then had no more power to borrow additional money on the defendants' credit than any other three citizens of the town. Lowell etc. Bank v. Winchester, 8 Allen 109, 114, 115. And not only was this so, but selectmen not having authority, ex officio, without a vote of the town, to borrow money on its credit, and the fact that the notes in suit were executed by an agent being apparent upon their face, the plaintiffs must be deemed to have had notice of the agency, and to have taken the notes at the risk of the authority of the agent to give them. Great Falls Bank v. Farmington, 41 N.H. 32, 44; Rich v. Errol, supra, 359; Richards v. Columbia, 55 N.H. 96, 99.

And such is the general doctrine. "The person dealing with the agent, knowing that he acts only by virtue of a delegated power, must at his peril see that the paper on which he relies comes within the power under which the agent acts." The Floyd Acceptances, 7 Wall. 666, 676, per Miller, J.; Marsh v. Fulton County, 10 Wall. 676; Stone v. Bank, 174 U.S. 412, 421. "It general and fundamental principle of law that all persons, contracting with a municipal corporation must, at their peril, inquire into the power of the corporation or its officers to make the contract. . . . So, also, those dealing with the agent of a municipal corporation are likewise bound to ascertain the nature and extent of his authority. This is certainly so in all cases where this authority is special and of record, or conferred by statute. The fact in such a case that the agent made false representations in relation to his authority and what he had already done will not aid those who trusted to such representations to establish a liability on the part of his corporate principal." 1 Dill. Mun. Cor. (2d ed.), s. 447, and authorities cited.

If these views are correct (and of their correctness we entertain no doubt), they are decisive of the contention that, having clothed their agents with power to borrow money, the act of borrowing from the plaintiffs was a representation by the agents upon which the plaintiffs, acting in good faith, had the right to and did rely, and the defendants are consequently estopped deny their liability. It may properly be added, however, that it has been expressly decided that a state is not estopped by the unauthorized acts of its officers (Attorney-General v. Marr,55 Mich. 445; State v. Brewer, 64 Ala. 287; Pulaski County v. State, 42 Ark. 118), and if this be so, it logically follows that a town not. Wooster v. Plymouth, 62 N.H. 193,208, 209; Doolittle v. Walpole, 67 N.H. 554.

Judgment for the defendants.

CHASE, PEASLEE, and YOUNG, JJ., did not sit: the others concurred.